Vulcan set for dual listing; shares pitched at $A7.10

AUSTRALASIAN steel distributor Vulcan Steel expects to list on the Australian and New Zealand exchanges on November 4 after an initial public offer process that has involved 42 or so existing shareholders selling down their stakes by 40%.

The shares for the dual listing have been pitched at $A7.10 ($NZ7.44) each, which would give the company a market capitalisation of $A933 million or just under a billion in New Zealand dollar terms.

The ASX will be Vulcan’s primary listing. The offer was aimed at raising $A371.5 million.

Chairman Peter Wells is the biggest shareholder with 23%.

‘‘The company is 26 years old and basically the initial group of shareholders have been in for that period, so really this is the succession plan for most of those shareholders who really want to hand on to the next generation,’’ chief executive Rhys Jones said.

Vulcan started with an initial staff of six and has grown organically, staff now numbering 830.

The company, which counts Steel and Tube to be its main competitor in New Zealand, and BlueScope, Infrabuild and Amari in Australia, has its own fleet of trucks and several purposebuilt sites.

‘‘It’s a distribution play rather than steel,’’ Mr Jones said.

The IPO process had attracted a good mix of Australian and New Zealand institutions, as well as from retail investors.

The company’s forecast a dividend yield of 4.5%6%, with revenue of $A810 million, and a net profit (before share float costs) of $A73.7 million in the year to June 2022.

The offer documents put

Vulcan’s debt at $A314.5 million.

‘‘We have positioned the company with a new set of investors, who are actively wanting growth and further development,’’ Mr Jones said.

‘‘We have set the company up for the next stage — the next 25 years — to be a much larger company.’’

Supporting documents for the offer say Vulcan is a successful Australasian distributor and valueadded processor of metal products with an appetite for profitable and value accretive growth.

Vulcan started off in carbon steel distribution and over time has expanded into plate and coil processing as well as stainless and engineering steel distribution and processing.

It supplies steel and steel products to about 12,000 customers in Australia and New Zealand. Of its 29 sites, 16 are in Australia.

About 60% of revenues stem from the Australian operations, with 40% from its home market of New Zealand.

The company launched its IPO last week, after securing about $220 million in cornerstone bids. —